After a Bruising Year, McGraw-Hill Faces a Tough Fourth Quarter

McGraw-Hill (MHP) is coming off a tumultuous year that saw CEO Harold McGraw III (pictured) execute the sale of BusinessWeek to Bloomberg and a major corporate reorganization (with lost jobs for hundreds of employees). On the plus side, McGraw-Hill's Standard & Poor unit started slowly coming out of a funk, thanks to small improvements in debt markets. Now, McGraw-Hill is set to report its fourth-quarter earnings before the market opens on Tuesday.The company's K-12 education division took the biggest toll on third-quarter earnings, which saw division sales drop 11.6% to $1 billion and operating profit fall 16% to $298 million.

As a result, analysts are expecting something of an uphill battle for McGraw-Hill's fourth quarter. According to First Call, the consensus fourth-quarter earnings per share (EPS) estimate for the global information services provider is 40 cents a share (on a 1.1% overall decrease in revenue). For the full year of 2009, the EPS estimate is $2.26 (a 7.3% drop). First Call also expects McGraw-Hill to earn 25 cents and $2.56 a share for first-quarter 2010 and fiscal 2010, respectively.

On Jan. 20, in a bid to return more capital to shareholders, McGraw-Hill increased its regular quarterly cash dividend on common stock to 23.5 cents a share, a 4.4% jump and the 37th consecutive annual increase. The new dividend payout, which goes into effect on March 10, is part of a 17.1 million share repurchase program initially approved in 2007. The program had been halted a year ago to preserve capital.